Monday, December 23, 2013

Police declared downtown Hamburg a "danger zone," giving them the right to search and detain people without initial suspicion, as they prepared to evict squatters from Rote Flora, a theater complex that has been squatted since 1989, Al Jazeera reports.

Rote Flora, a half-destroyed theater built in 1888, was legally leased by left-wing squatters in 1989 and turned into a cultural center that regularly organizes parties and flea markets.

The police action came after protests sparked by the threat of eviction after the city sold the site to a developer. Residents also demonstrated against forced evictions in the Reeperbahn red-light district and demanded better rights for refugees.

It's amazingly two-faced. Western democracies are outraged when authorities claimp down on freedom of assembly and expression in places like Tahrir Square, but engage in military-style repressive clamp-downs on their home turf.

Friday, December 20, 2013

... is not in our stars, but in ourselves.Grand rhetoric courtesy of William Shakespeare. But not a particularly ringing endorsement of the possibility of social change.Which is why Roger Cohen's heartfelt column in the international edition of the NYT seems oddly bloodless. He's right in his diagnosis: inequality is a massive problem -- in India and throughout the world. 'When a phrase like “the bottom 90 percent” [or, I might add, 'we are the 99 percent'] rolls off the tongue as if this were a normal state of affairs,' he writes, 'something is amiss.'But what's his prognosis? Only that nugget from Shakespeare. "Policy change can help," he writes in his last sentence, but the real change "must come from within each of us."Well, sure. Duties and obligations, as Simone Weil wrote decades ago, come before rights.Indeed, to look at the full quote from Shakespeare (full text of the play here), reveals that the Bard was not making a plea for inward inquiry but rather one for revolution: 'The fault, dear Brutus, is not in our stars but in ourselves, that we are underlings.' Cassius, who speaks this line, wants Brutus to join a bloody plot to oust the current leader, Julius Caesar, and seize power.

Yes, as Cohen notes, the system is rigged and "the common man and woman have been had." But individualism -- a.k.a. the profit motive -- got us into this mess. Individualism -- a.k.a. charity, or, in Cassius's and Brutus's case, the desire for power and fame -- is not what's going to dig us out.

There are lots of things groups can do collectively to promote change and reduce inequality. Here's one place to start: the mass of people -- the squatters and System D merchants who are actually the bedrock of every city in every developing world country -- need to organize and empower themselves. Their self-mobilized, self-governing groupings will lead the way to development that is more democratic and egalitarian.

As Nobel-prize-winner Elinor Ostrom wrote in a paper that's as relevant today as it was when it was written in 1994, "we will all be the poorer if local, self-organized institutions are not a substantial portion of the institutional portfolio of the 21st century."

Wednesday, December 11, 2013

It all sounds super-nefarious: Global Financial Integrity, a Washington-based non-profit, reports that developing countries across the globe lost almost $1 trillion from illicit financial flows in 2011. Sub-Saharan Africa--a region that needs all the money it can get--lost $52 billion in 2011, the equivalent of 5.7 percent of total Gross Domestic Product drained from the region's economies. Leading the list of the porous states on the continent: Nigeria, which lost $142.3 billion between 2002 and 2011.

So who are these criminals who are bleeding developing countries dry? It ain't terrorists or criminal cartels. Rather, the criminal enterprises at the root of this are mostly respected multinational corporations.

Though transfers from criminal cartels
and terrorist organisations are a problem, the report concluded that the majority of
this illegal financial activity stems from misleading and discounted trade invoices filed by
international corporations.

And here's an amazing stat: this corporate malfeasance amounted to ten times the total value the developing world received in aid. Think about that the next time you consider the aid vs. trade question.

Tuesday, November 19, 2013

Johannesburg is going after street hawkers, as this article reports. But note the language: Who can be against 'clean up' and 'order.' Meanwhile the municipality is putting thousands of families in jeopardy and crushing the traditional life of the city.

Thursday, November 7, 2013

What gives its special quality and character, its toughness and cohesion, to the industrial system built up in the last century and a-half, is not its exploded theory of economic harmonies. It is the doctrine that economic rights are anterior to, and independent of, economic functions.

--R.H. Tawney

The fact that two people exchange their products is by no means simply an economic fact. Such a fact -- that is, one whose content would be exhausted in the image that economics presents of it -- does not exist.

--Georg Simmel

Wealth is like muck. It is not good but it be spread.

--Francis Bacon

I do not deny that modern economic theory can make a contribution to running a household, or a village, or a region, or even the entire world -- though such a denial would at all be unrealistic. What I do deny is that modern economic theory can replace the traditional ways without any loss of information or quality of life.

Friday, November 1, 2013

Politics always puts forward Ideas: Nation, Empire, Union, Economy, etc. But none of these forms has value in itself; it has it only insofar as it involves concrete individuals. If a nation can assert itself proudly only to the detriment of its members, if a union can be created only to the detriment of those it is trying to unite, the nation or the union must be rejected.

And, I would add, if an economy can assert itself only to the detriment of the whole of the society it is designed to assist, that economy must be rejected.

The philosopher Paul Feyerabend identified the problem in his agreeably anarchic book Against Method (excerpt here):

People all over the world have developed ways of surviving in partly dangerous, party agreeable surroundings.The stories they told and the activities they engaged in enriched their lives, protected them and gave them meaning. The 'progress of knowledge and civilization' -- as the process of pushing Western ways and values into all corners of the globe is being called -- destroyed these wonderful products of human ingenuity and compassion without a single glance in their direction.

Indeed, it seems to me that our economic goals should be retooled along the lines of what Charles Newman identified in his posthumously published novel, In Partial Disgrace: "to extract money from the real economy and cheerfully redistribute it into the inefficient, living part of the culture."

Monday, October 28, 2013

... comes at the very end of this article on India's huge informal economy from The Hindu. Given the continued growth of System D in India, even in an era of unprecedented total economic growth,

It must be the case that there are many areas where the
informal sector is not only not in competition with the formal sector,
but actually services its requirements....In the process low wages in the informal economy help sustain profits in the formal sector. Only when this possibility is taken into account can we explain the size and scope of India’s informal economy.

After all that's been written about informality in the four decades since Keith Hart coined the term in 1973, shouldn't this be the start of any analysis rather than the tentative conclusion.

Sunday, October 20, 2013

The bus seems to have enough space, and the lane of tuk-tuks and motorcycles doesn't seem unduly compressed. So how is this street market in Kalamboli, a major transportation hub of Navi Mumbai, in suburban Bombay, a 'menace,' as DNAindia reports?

This editorial attitude is typical of much of the news coverage of street hawkers in India. The photo suggests that there are more shoppers at this bustling transit transfer point than there are merchants -- but nonetheless, the dominant narrative is that the merchants constitute a 'menace.'

The bias exhibited by newspapers and media outlets is the real menace.

Street hawkers naturally gravitate to locations where shoppers are. That's not a menace. Indeed, you might argue it's a public service.

Monday, October 7, 2013

A dozen years ago, the city of Mumbai spent $4.8 million to build a
mall that it thought would allow it to get rid of hawkers near the Dadar
train station. But it forgot that street hawking is governed by the
same three principles that govern real estate: location, location,
location. The new market was far too far from the station for customers
to flock to.

As one sensible street vendor told DNAIndia: “I have been carrying on my business from this spot (near the station)
for 25 years. I have observed that people get out from the station and
shop before going home. Who will go all the way to Plaza Market?”

The news agency reports that the market building is mostly vacant while the streets around the station are as thronged as ever.

More proof that cities must work with street vendors, not against them.

Monday, September 30, 2013

The Street Vendors Bill that passed the Lok Sabha (India's lower house of parliament) in early September, is a major step in the ongoing battle for dignity and recognition of the validity of informal workers. Sharit Bhowmik, who has studied the plight of the vendors, who are routinely abused by authorities and in the press, terms it "a landmark piece of legislation for the urban poor." Novelist Chandrahas Choudhury salutes street vendors as "the stars of India's vast informal economy
-- those without contracts, social security or employer benefits --
inhabited by more than 80 percent of the country's 450 million
workforce."

As with all grand policy frameworks, though, what's important is how the Street Vendors Bill will be implemented. For instance, the law suggests that street hawkers will need to register with
the Town Vending Committee before they start selling, and apply for a vending
certificate "that will be issued based on various criteria." Of course, it's easy to imagine how local politicians could use these rules and criteria to make life more difficult for vendors.

Let's all keep on this and follow the local implementation of this groundbreaking bill.

Friday, September 27, 2013

Ah, the informal sector. This article from Zimbabwe's Financial Gazette terms it "the major challenge." But the difference between a challenge and an opportunity is the difference between who is doing the describing.

To the merchants of Mupedzanhamo -- Harare's largest street market whose name, loosely translated, means 'poverty reliever' -- selling on the street is their only opportunity for survival. To the political elite in many countries, the fact that people are increasingly embracing that opportunity is a challenge.

The writer calls Harare's streets "a typical example of the dangers of an unbridled informal sector." But the dangers he points to are not created by the street vendors, and, indeed, are hardly dangers at all:

the market "thrives on chaotic governance."

"members of the police force have taken advantage of the situation to also protect vendors at a fee."

business is so brisk at the market called Siyaso, that everyone in the city knows a basic commerical truth: "if in Harare and you cannot find anything, head for Siyaso and you will get it."

These informal markets need change from the "regulatory, planning, moral, as well as human relations perspectives," an urban planner quoted in the article says. "In other words," the reporter suggests, "Zimbabwe’s formal sector must simply dominate and drive the country’s economy."

But the formal sector, the article notes, only employs 10 percent of the people. The bulk of the population works informally, and their labors produce a prodigious amount of wealth: US$4,2 billion. And that's a thirteen-year-old estimate.

It's time for Zimbabwe's government -- and governments all over the world -- to start looking at things from underneath. It's only from analyzing their economies from the bottom-up that they can recognize the opportunities at the root of what today they see as dangers and challenges. The street economy is the economy of the people--which makes it the most important economy on earth.

Tuesday, August 13, 2013

Next City offers a nuanced take on 'pure water' -- the system of selling plastic sachets of drinking water. 'Pure water' is the municipal water system of cities that don't have a municipal water system. Equally necessary and nasty, sachet water is, as the article notes, a grand conundrum -- simultaneously "a huge urban economy, its very own black market, an environmental disaster and a private-sector-driven public health coup."

Do laugh at the last quote of the article, though. While it comes from the mouth of a University of Miami professor, it's a great example of one of the favorite sports of West Africa--Nigeria-bashing. I dey go Las Gidis many times, and I've never seen river water bagged as 'pure water.' Indeed, all pure water companies are registered with and inspected by NAFDAC--Nigeria's National Agency for Food and Drug Administration and Control--and I don't know anyone there who would drink any bag of water that didn't have NAFDAC certification.

Saturday, August 3, 2013

The Associated Press reports on the people who smuggle goods across the 227-mile-long border between the Domincan Republic into Haiti.

Factoid: The Dominican Republic estimates that the country's "14 border markets host more than 50,000 vendors and says Haiti's
informal merchants earn about $165 million a year reselling the goods
back home. That's in addition to the country's $1.1 billion in formal
exports to Haiti."

History: "The Dominican government opened the markets in the early 1990s, when a
military regime ruled Haiti and the U.N. imposed an embargo. The markets
have since bustled because Haiti's ports are notoriously expensive and
rife with red tape and poor infrastructure."

In June, Haiti banned imports of Dominican poultry and eggs, claiming it was defending the country against avian flu. In response, the Dominican Republic closed its border markets for a day.

Perhaps in pursuit of tax revenue, Haiti's government has been trying to crack down on the smuggling, pushing to cut tax-free border trade to just one day a week. This has led to charges that the government of Michel Martelly is soaking the poor while subsidizing the rich, particularly by giving tax breaks to hotel owners so they can
build lodging and attract tourists.

As Mario Joseph, a lawyer whose clients have been critical of the Martelly government, told the AP, "The only people paying taxes are the street merchants. The big shots aren't paying."

Friday, July 12, 2013

Rome Mayor Ignazio Marino has started a crackdown on street peddlers in many of the famous piazzas of the Italian capital, so many are now plying their trade in the Vatican's St. Peter's Square. Wanted In Rome has details.

Are these street merchants really such an "invasion" that they require massive civic action?

Thursday, July 4, 2013

Just what Africa needs: an executive MBA program that will teach business to "local managers working for international firms" in the Democratic Republic of Congo. The FT has details. Tuition for the one-year program will cost almost $9,500 per student. The Frankfurt School of Finance and Management says that its presence in the DRC offers “great market opportunities.” The FT comments that "the DRC, a country of 75m people at the heart of the African continent, represents an untapped market."

Plainly, the idea that the invisible hand of the market will solve everything--the myopic economic view of the world--is not working. Economic growth doesn't mean that fewer people are hungry or that more people have jobs.

Inter Press Service interviews José Graziano da Silva, Director-General of the Food and Agriculture Organization of the UN.

"Growth and increasing food production are not enough," he tells Inter Press. "In Africa we need to look particularly at access to food.
Many undernourished farmers suffer from not having access to land,
while others cannot buy the food they need because it is not cheap
enough for farmers to buy according to their salary, while many of them
are jobless and without income. The challenge is to approach all these
things at the same time."

His agency wants a global commitment to zero hunger in Africa by 2025, or a dozen years from now.

Wednesday, July 3, 2013

The village-based system of System D money lenders is so embedded in Cambodian culture, the Phnom Penh Post asserts, that it is blunting attempts of formal banks and microfinance institutions to spread around the country.

Bun Mony, president of the Cambodia Microfinance Association (CMA), told the paper that
informal lending was widespread before banks and microfinance
institutions began sprouting up all over the country. “So it became . . . the culture of Cambodian people.”

“Borrowers and money lenders know each other on a first name basis,
residence, credit history, etc, and do not require borrowers to fill out
application forms,” Kang Chandararot, director of the Cambodia
Institute of Development Study, added.

Informal loans can carry an interest rate of 10 percent per month, the paper reports. That's usury, I agree.

Still, despite the eye-popping interest rates, there's a larger point here. The traditional system works, albeit with problems. So why must we force people to adopt the western, formal, arms-length transactions of banking? Why do economists and politicians continually deride traditional ways of doing business that have worked reasonably well for people for decades? Why do they insist on stripping away relationship models of business? Why can't banks organize village cooperatives, which function like System D lenders, making handshake deals based on firm and longstanding relationships of trust, but with less onorous rates?

Monday, July 1, 2013

A new United Nations High Commission for Refugees (UNHCR) analysis reports that there were more than 45 million displaced people at the end of 2012, the highest number in almost two decades. While that may seem a tiny on a planet of 7 billion, look at it this way: one in every 200 people on earth has been displaced. No wonder the UN agency calls displacement 'the new 21st century challenge.'

Wednesday, June 26, 2013

System D in Africa could well be bigger than previously estimated, according to this article from Investment Europe. Citing a report from Old Mutual Investment Group, the article suggests that the informal economy in African countries could be the same size as the legal economy.

Key quote: The size of the informal economy is not certain, but many economists
estimate that the Nigerian and Egyptian economies could be more than
twice the size of their respective official figures.

Another interesting idea -- that informal trade, rather than thriving during times of unrest, may also be challenged by sectarian violence: the slowdown in the north of Nigeria is due to the safety issues making
it more difficult to service its neighbours, Niger and Chad.

Friday, June 21, 2013

The UN's IRIN News Service reports on current conditions in Timbuktu, the Malian desert crossroads that was occupied by various groups in favor of sharia law before the French army pushed them out in a military operation early this year.

Money quotes--

From Mayor Hallé Ousmane: “Timbuktu is free again, but it is a town where there is no economy at
all, a town where everything is gone, everything is lost, apart from
hope.”

From Ousmane Maïga, a Timbuktu resident who fled the city and recently returned: “Now it’s up to the government to bring peace and reconcile the different communities.”

From Seydou Baba Kounta, a professional tour guide: “Since the Islamists left, nothing has been done. We don’t sense the
presence of the state. The state is not here. I appeal to the state to
work hard so that Timbuktu emerges from this obscurity.”

Seems like a recipe for paralysis. The Mayor suggests that the government barely exists (“Eighty percent of the civil servants are absent. Even if they were
here, their offices are empty. There’s no equipment, no computers,
nothing - not even a chair.") while the citizens demands government action.

Without a doubt, reconciliation is a priority. But perhaps, in this seeming power vacuum, there is space for Timbuktu's citizens to take some baby steps, using their sweat and sensibility to begin the painful process of re-inventing the city, its economy, and its governing structure. A little social anarchism would be a true revolution after the horror that played out during the past year.

Wednesday, June 19, 2013

There really are things outside of economics. So says economist Ricardo Hausmann in this essay posted on Project Syndicate. Some solid sound bites from the former chief economist of the Inter-American Development Bank and current Harvard Professor:

'It requires many years of training and abstract economic thinking to miss the obvious.'

'Economists and policymakers have disregarded the physical aspects of urban life.'

'Governments will have to start doing some good things, not just stop doing some bad ones.'

While it's heartening that a respected economist now admits that his fellow professionals seem to have no idea of real life and that government ought to do more than simply minimize evil, I find something cold in Hausmann's analysis. What's missing from what he calls the physical aspects of urban life? People. The men, women and children who are the actors/motivators/doers/makers and sometimes victims of urban life.

The informal sector is mostly a consequence of the fact that people are
disconnected from modern production networks,' Hausmann writes, 'an inefficiency that will
not be resolved simply by reducing the cost of registering a business
or forcing small firms to pay taxes. What is required is a redesign of
urban space, including subways and dedicated bus lanes, and a more
integrated approach to housing, social services, and production areas.'

Rethinking the production of space is a useful practice, but the way Hausmann seems to envision it, it's a top-down approach, and therefore just more of the same.

Tuesday, June 18, 2013

I haven't seen the book, but, according to the review's summation, the System D street economy in fact means waged labour on crushingly
oppressive terms. The supposedly self-employed include street vendors,
who are “easy prey” for the police, sex workers hawked around by their
pimps, home-based workers or stallholders permanently in debt to
suppliers and agents, and the like.... A “floating army” of the jobless fills the
daily-wage markets, which are in effect slave-auctions.

Monday, June 10, 2013

South Africa lost 13,097 jobs this past month--an amount almost offset by the 11,009 jobs created in System D. Meantime, 3.9 million workers--representing almost 1/3 of total workers in the country--have temp jobs. Iafrica has details.

Can we please stop denying that System D is the realm of growth.

"The enthralling swarm in the souk...So this was the city: a never-ending frenzy, clashing images, sharp noises, overlapping and fusing colors....He had nothing to sell and was simply going along to get to know the world, the real one...The souk was already a huge magic theater where people were meeting and crowding each other."
--Tahar Djaout

Wednesday, June 5, 2013

Iran raised taxes by 30 percent last year and the government has proposed another 38 percent increase this year. In response, many merchants in Tehran's Grand Bazaar have rolled down their steel gates and closed their businesses. Money quote, from Hossein, a merchant who spoke with the Financial Times: "These days you can rely on your mobile phone like street dealers who pay no taxes for buying and selling dollars. But if I sit in my shop then I have to pay tax" In some sections of the Bazaar, only 14 percent of the stores are still open.

Sunday, June 2, 2013

For the past dozen years, Mexico has pushed homeownership for the poor. Instead of squatter communities, the government arranged for the state-run mortgage agency to provide loans to people buying into massive cookie-cutter neighborhoods built by favored construction companies. Today, two of the big-three homebuilders are near bankruptcy, and the third is headed that way. Shares of all three have dropped 60 percent since the beginning of 2013.

But this is not simply a business story about a government subsidized bubble. It's also a story of ingenuity in the face of adversity.

Aldo Ortiz, one of the 2 million Mexicans who took a chance on a mortgage and a dream of a suburban home--his in a community calle Parque del Cipres outside Mexico City--wound up quitting his job in an electronics company because of the impossibly long commute (3 hours a day, round trip) and opening Miscelaneo "el Cipres", a System D mini-mart, in his living room. There, he sells beer, water, tortillas, snacks, canned goods, detergent, etc.

No
country better exemplifies Africa's agricultural decline than
Nigeria. In the 1960s, before the oil bonanza, this was one of the most
promising food producers in the world, beating the likes of Malaysia and
Indonesia in palm oil, and the US and Argentina in groundnuts. It
provided 18 percent of global cocoa production, a figure down to 8
percent today. And while it produces 65 percent of tomatoes in western
central Africa, it is now the largest importer of tomato paste (from
China and Italy).

In an interview with This is Africa at the
World Economic Forum in Cape Town last week, the minister for
agriculture, Akinwumi Adesina, reeled off these statistics with regret.
"Nigeria has transited from being a self-sufficient country in food to
being a net importing country, spending $11bn importing rice and fish
and sugar and so on. It just makes absolutely no sense to me at all”.
While
Nigeria is second in the world in citrus production and Africa’s
biggest pineapple producer, its supermarkets are stocked with
concentrated, imported products of both. “The only local content is
water from Nigeria,” the minister complains. Multinationals testify to
the challenges of agricultural import-dependence in their local
operations. “We have thirteen factories in Africa that use products like
soft oils, tomatoes or starch-based compounds on a daily basis, but
much of this is imported, wasting foreign exchange and increasing our
carbon footprint,” says Marc Engel, chief procurement officer at
Unilever. The company owns the largest soap factory in Africa, but have
to import palm oil from Asia to keep it running, and they import
sorbitol from China for their local oral care products, when cassava
would do the job.

Seeking to "protect the character and integrity of the Commonwealth Games," and to "control activity" around sporting venues, the Scottish government has proposed punitive new rules banning buskers, ambush marketers, and street traders during the games, which will be held in the city next year.

Street performers and merchants who violate the rules--which will impact 17 zones around the city--will face fines of up to £20,000.

The BBC and Evening Times lay out the plans for Scotland's most dangerous criminals.

Money quote from lawyer Jamie Watt: "Sponsorship revenue is an essential part of any major modern sporting
event. Events simply can't happen without this income, that's why
regulations are required – to protect investment."

Wednesday, May 15, 2013

"African policymakers followed Structural Adjustment Programmes over the
last 10 – 15 years. It worked, it delivered results. It delivered
economic growth and poverty reduction. You can’t dispute that."

--Shantanayan Devarajan, Chief Economist of the World Bank's Africa division

Tuesday, May 14, 2013

Self-development arising from the most deprived neighborhoods of Paris is defying the odds in austerity-crushed Europe. The New York Times reports.

Raoul Sodjinou, who emigrated to Paris from the Republic of Benin and is trying to make his struggling cosmetics business a winner, confided the key to what he believes will be his ultimate success: “Those who say stop — that’s not me."

The article doesn't say if any of these entrepreneurial efforts started off-the-books. But it's the entrepreneurial spirit that is true to System D as well: “If we wait for the government to do something, people will just remain
stuck,” Mourad Benamer, founder of the successful franchise Eat Sushi chain of restaurants, said. “If we want things to improve, we have to do
it ourselves."

About Me

I spent most of the past four years hanging out with street hawkers, smugglers, and sub-rosa import/export firms to write Stealth of Nations, a book that chronicles the global growth of System D--the parallel economic arena that today accounts for half the jobs on the planet.
Prior to that, I lived in squatter communities across four continents to write Shadow Cities, a book that attempts to humanize these vibrant, energetic, and horribly misunderstood communities.
My articles on cities, politics, and economic issues have appeared in many publications, including Harper's, Scientific American, Forbes, Fortune, The Nation, The New York Times, The Washington Post, Metropolis, and City Limits. Before becoming a reporter, I worked as a community organizer and studied philosophy. I live in New York City and do most of my writing on manual typewriters.